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Sunday, October 25, 2020

Maharashtra extends bank guarantees to co-op sugar mills

List reflects political realignment: More BJP-led mills, but NCP-led mills get higher amount

Written by Parthasarathi Biswas | Pune | September 29, 2020 7:44:45 pm
maha vikas aghadi, maharashtra cash crunch, maharashtra sugar mills, maharashtra sugar mills pre seasonal loan, maharashtra sugar mills pre seasonal loan guarantee, indian express newsCooperative sugar mills, which need pre-seasonal loans to pay for harvesting labour and other works, had sought support from the state government

Ahead of the 2020-21 sugarcane crushing season, the way Maharashtra’s political forces impact its sugar sector is once again evident in the list of cooperative sugar mills that have received state government guarantees to raise funds from banks for their operations. While the government has stood guarantee for more mills managed by BJP leaders, the amount sanctioned to NCP-led mills is much higher.

Cooperative sugar mills, which need pre-seasonal loans to pay for harvesting labour and other works, had sought support from the state government, asking it to stand guarantee so that the mills could take loans from banks. After the government agreed, the Maharashtra State Cooperative Sugar Factories Federation had worked out an amount of Rs 1,128.6 crore as bank guarantee for 38 mills to raise the necessary short-duration loans.

The state government had instructed the sugar commissioner to examine each proposal and fix the guarantee amount to be extended to the mills. Based on the availability of cane and the combined crushing capacity of the mills, the commissioner had made a proposal to extend bank guarantee to only four mills for an amount of Rs 90 crore.

Subsequently, a committee headed by Deputy Chief Minister Ajit Pawar reviewed the proposals and came up with a fresh one,which was cleared by the state cabinet recently.

The proposal, a copy of which is with The Indian Express, shows that the total amount of bank guarantee sanctioned for the mills has worked out to be Rs 371.57 crore. Of the 38 proposals for bank guarantees, eight were rejected as these mills were already facing action from banks under the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002.

Of the 30 mills that made it to the final list, 12 are managed by BJP leaders, nine by NCP leaders, four by Congress leaders and three by Shiv Sena leaders. Two mills are managed by a mixed body with leaders of various parties. The remaining two mills are managed by a body with no known political affiliations.

But it’s the NCP-led mills which have managed to get state guarantees for the maximum amount — Rs 152.97 crore for nine mills – much higher than the 138.43 crore for the 12 mills managed by BJP leaders.

Mills managed by Shiv Sena and Congress leaders received Rs 26.81 crore and Rs 33.09 crore, respectively, in way of bank guarantees.

It is no secret that ruling parties in Maharashtra – a state where political leaders have heavy stakes in the sugar sector — have used government largesse to sugar mills for leverage. While the NCP-Congress government had extended similar guarantees to mills during its 15-year-long term, the practice was adopted by the Devendra Fadnanvis-led BJP-Sena government as well.

In the months before the state Assembly elections last year, a number of sugar barons switched parties, but many of these political calculations went awry when the Congress, NCP and Sena joined hands to form the government.

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